SCOPE 3 EMISSIONS CALCULATION METHODOLOGY REPORT/media/Files/A/Anglo... · 2020-05-22 ·...
Transcript of SCOPE 3 EMISSIONS CALCULATION METHODOLOGY REPORT/media/Files/A/Anglo... · 2020-05-22 ·...
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SCOPE 3 EMISSIONS
CALCULATION
METHODOLOGY REPORT
April 2020
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Table of Contents Introduction ....................................................................................................................... 3
Approach............................................................................................................................ 3
Accounting and Reporting alignment to selected guidance .............................................. 3
Accounting for Convergent Value Chains ......................................................................... 4
Organisational and Reporting Boundary ......................................................................... 4
Anglo American 2018 Scope 1, Scope 2 and Scope 3 Results Summary ...................... 5
Scope 3 Emissions Categories ......................................................................................... 6
Category 1 Purchase Goods and Services ....................................................................... 6
Category 2 Capital Goods ................................................................................................ 8
Category 3 Fuel and Energy Related Activities ................................................................ 9
Category 4 Upstream Transportation and Distribution .................................................... 10
Category 5 Waste Generated in Operations ................................................................... 11
Category 6 Business Travel ........................................................................................... 12
Category 7 Employee Commuting.................................................................................. 13
Category 8 Upstream Leased Assets ............................................................................. 14
Category 9 Downstream Transportation and Distribution ............................................... 15
Category 10 Processing of Sold Products ...................................................................... 17
Category 11 Use of Sold Products ................................................................................. 19
Category 12 End-of-Life Treatment of Sold Products ..................................................... 21
Category 13 Downstream Leased Assets ...................................................................... 23
Category 14 Franchises ................................................................................................. 24
Category 15 Investments ............................................................................................... 25
References ....................................................................................................................... 27
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Introduction
In 2019, Anglo American plc undertook a group-wide Scope 3 emissions assessment, covering the period 1 January 2018 to 31 December 2018. This Methodology Report describes the approach used in Anglo American’s first ever group-wide Scope 3 emissions assessment, which will form the basis for Scope 3 emissions accounting going forward. The Methodology Report defines the organisational and accounting boundaries, methodologies, assumptions, sources and key references applied, and concerns emissions expected to arise as a result of activities undertaken by Anglo American during 2018, which forms the inventory Base Year.
Our Scope 3 emissions assessment results reported in this Report form part of our continuing work to ensure consistency with the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD) and transparency in communicating our approach to assessing and managing relevant climate-related risks and opportunities.
Anglo American worked with the Carbon Trust to undertake the 2018 group-wide Scope 3 emissions assessment.
Approach
Accounting and Reporting alignment to selected guidance
The Methodology Report has been undertaken in conformance with WBCSD and WRI (2011) Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard Supplement to the GHG Protocol Corporate Accounting and Reporting Standard (the “GHG Protocol”) as amended, and the Required Greenhouse Gases in Inventories, Accounting and Reporting Standard Amendment (2013). The additional guidance provided in the GHG Protocol Technical Guidance for Calculating Scope 3 Emissions (Scope 3 Guidance) was also considered in the Scope 3 assessment. The disclosures in this Methodology Report satisfy the reporting requirements established by the GHG Protocol.
According to the GHG Protocol (2011) as amended, an organisation’s Scope 3 calculation and reporting should abide by the principles of relevance, completeness, consistency, transparency, and accuracy. In this Methodology Report, where distinct trade-offs have been made, these are highlighted and the rationale provided.
Our approach has been to favour the principles of completeness and consistency, especially where these provide greater insights and therefore relevance for the users of this information, sometimes at the expense to accuracy. It is expected that we will continue to improve our disclosure on Scope 3 in time, and diminish the need for such trade-offs.
The results reported in this Methodology Report refers to the 2018 period; for that period the information disclosed in this Report meets the disclosure requirements of Global Reporting Initiative (GRI) standard GRI 305 (‘Disclosure 305-3 – Other indirect (Scope 3) GHG emissions’).
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Accounting for Convergent Value Chains
Anglo American produces both Metallurgical Coal and Iron Ore, both of which are critical
inputs into the steel manufacturing process. It was recognised that there is likely overlap in
accounting for the emissions from these two commodities having some common downstream
value chain activities, specifically Category 10 (Processing of Sold Products) and Category
11 (Use of Sold Products). It was determined to be good practice to account as fully as
possible, without necessarily duplicating or over-accounting for emissions arising from
downstream activities in convergent value chains within the same organisation, albeit from
different subsidiaries. Quantification alternatives were studied, and an approach applied that
balances relevance, completeness and accuracy, within the framework of the current Scope
3 quantification approach.
Organisational and Reporting Boundary
For the purpose of determining Scope 3 emissions, product value chains have been identified as a meaningful approach for management and monitoring purposes. In our approach, emissions have been attributed to Operations and Business Units, that have been categorised by the major commodity produced and traded (if relevant), namely: Metallurgical Coal, Thermal Coal, Iron Ore, Nickel, Copper, Platinum Group Metals, Diamonds, and Manganese.
In the case of Coal Australia, the major product output is metallurgical grade coal. However, it is recognised that a portion of the product is thermal coal quality. For ease and consistency of communication, this distinction has not been made in the accounting and reporting of Scope 3 emissions in this Methodology Report; all output and emissions arising in the value chain associated with Coal Australia, is named “Metallurgical Coal”. Similarly, all output and emissions arising in the value chain associated with Coal SA, is named “Thermal Coal”.
Anglo American defines its organisational boundary on an operational control basis, which informs its accounting and reporting of Scope 1 and Scope 2 GHG emissions. This approach is applied consistently in the accounting and reporting of Anglo American’s Scope 3 GHG emissions. Where operations were divested or discontinued during 2018, these operations were wholly excluded. This was determined to be an efficient approach for base year emissions determination, with the specific purpose of comparability with following years and the users’ immediate management needs.
Anglo American’s emissions inventory boundary is defined to include all assets for which the group has operational control. The company does not have upstream-leased or downstream-leased assets for which it has operational control, and these categories are therefore not relevant and not calculated.
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Anglo American 2018 Scope 1, Scope 2 and Scope 3 Results
Summary
Anglo American Scope 1, Scope 2 and Scope 3 emissions (Scope 3 by Category and major constituent)
Anglo American’s 2018 GHG emissions (MtCO2e) (excluding biogenic emissions1)
% of total Scope 1, Scope 2 and Scope 3 emissions (%)
Total Scope 12 9.55 4.0%
Total Scope 2 (location based)3 6.42 2.7%
Scope 3 Upstream value chain emissions
Category 1 Purchased goods and services 1.76 0.7%
Category 2 Capital goods 0.75 0.3%
Category 3 Fuel and energy-related activities 2.19 0.9%
Category 4 Upstream transportation and distribution 0.45 0.2%
Category 5 Waste generated at operations 0.02 0,0%
Category 6 Business travel 0.01 0,0%
Category 7 Employee commuting 0.03 0,0%
Category 8 Upstream leased assets N/A N/A%
Scope 3 Downstream value chain emissions
Category 9 Downstream transportation and distribution
4.31 1.8%
Category 10 Processing of sold products 83.88 34.7%
Crude steel making2 81.97 34.1%
Category 11 Use of sold products 128.47 53.2%
Metallurgical Coal 49.71 20.7%
Thermal Coal 57.85 24.0%
Category 12 End-of-life treatment of sold products 0.93 0.4%
Category 13 Downstream leased assets N/A
Category 14 Franchises 0.01
Category 15 Investments 2.92 1.2%
Total Scope 3 225.73 93.4%
Total Scope 1, Scope 2 (location based) and Scope 3 241.70 100%
1 Biogenic emissions originate in only selected instances in Anglo American’s value chain, specifically in the consumption of biodiesel in transport in Brazil which impacts Category 7 Employee Commuting. The Scope 3 contribution of biogenic emissions is considered nominal (57 tCO2e) and only applicable to that Category; and therefore it is not reported per category throughout this Methodology Report, for succinctness. 2 Crude steel making requires both Iron Ore and Metallurgical Coal as feedstocks. The emissions here include the preparation of the Iron Ore and Metallurgical Coal before introduction to the steel making process. The Iron Ore and Metallurgical Coal production for 2018 were converted into their crude steel equivalent following which apportionment of the blast furnace emissions between the two commodities was done and the basic oxygen furnace emissions assigned to Iron Ore products. The Metallurgical Coal production yielded more crude steel than Anglo American’s Iron Ore production, and as such the remaining crude steel equivalent of Metallurgical Coal was accounted for accordingly. 2 For consistency with Scope 3 emissions baseline, Scope 1 reported excluding emissions arising from those operations divested or discontinued during 2018 3 For consistency with Scope 3 emissions baseline, Scope 2 reported excluding emissions arising from those operations divested or discontinued during 2018
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Scope 3 Emissions Categories
Category 1 Purchase Goods and Services
Category 1
Scope 3 Category Description
Extraction, production and transportation of goods and services purchased by the company in the reporting year
Total Scope 3 Emissions (MtCO2e)
1.76
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Good, 0%)
Activity Data Source Anglo American data management systems providing: quantity of selected goods purchased in 2018 and spend on non-material goods and services
Emissions Data Source Secondary industry average data (Department of Business, Energy, & Industrial Strategy (BEIS UK, 2019), Eco-Invent 2016, IPCC 2006, Calc 2014, World Steel 2019) and Anglo American Scope 1 and Scope 2/2018 group spend (for spend-based and non-material goods and services)
Calculation Status Rationale
The emissions from this category are not material but are relevant to the company’s Scope 3 emissions inventory and for the users of the data; for raising internal awareness and providing the basis from which opportunities for mitigation may be identified and performance tracked.
The activity data in this category were
prioritised due to the influence that the
company has over them. The company can
place pressure on suppliers to improve
their ecological credentials and source
materials from alternative suppliers with
improved performance.
Calculation methodology
Activity data for goods purchased in large quantities and with known environmental impacts were calculated based on the quantity procured by each operation, and industry average emissions factors per unit mass applied to each. Non-material goods and services were calculated using a spend-based method. A proxy for
emissions per unit expenditure for the company was calculated using the company’s Scope 1 and Scope 2 emissions and the operating expenditure to yield an emissions factor per unit expenditure.
Allocations and Key Assumptions
It was assumed to be fair to assume that suppliers of the goods and services produce emissions in line with industry average estimates, and that general emissions factors may be applied for appropriately for specialised materials. Average representative conversion factors were applied in the instances where internal systems data for groups of goods had to be converted to alternative units for available emissions factors.
Exclusions
The combination of activity-based
emissions quantification for key operational
inputs and spend-based quantification for
non-material goods and services is
estimated to capture a large portion of
emissions arising from activities associated
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with the provision of these goods and
services, with any gap estimated to be
immaterial at this time.
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Category 2 Capital Goods
Category 2
Category Description Extraction, production and transportation of capital goods purchased by the company in the reporting year
Total Scope 3 Emissions (MtCO2e)
0.75
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Poor, 0%)
Activity Data Source Anglo American Annual Report (2018) as USD spend on capital goods for 2018
Emissions Data Source Quantis Suite Scope 3 Evaluator
Calculation Status Rationale
The emissions from this category are not material but are relevant to the company’s Scope 3 emissions inventory and for the users of the data; for raising internal awareness and providing the basis from which opportunities for mitigation may be identified and performance tracked.
The company does have considerable control over the design and type of capital good purchased. The inclusion is also relevant as these goods are long-term in nature and, particularly with regard to equipment and plant machinery, can be made more efficient and less environmentally harmful through innovation and investment in superior capital goods.
Calculation methodology
The group’s 2018 spend on plant, property and equipment was drawn from the Integrated Annual Report (2018) and an industry average emissions factor applied using a spend-based methodology.
Allocations and Key Assumptions
None
Exclusions
None
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Category 3 Fuel and Energy Related Activities
Category 3
Category Description Extraction, production and transportation of fuels and energy purchased by the company in the reporting year
Total Scope 3 Emissions (MtCO2e)
2.19
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Good, 0%)
Activity Data Source Anglo American data management systems as volumes for liquid and gaseous fuels; mass for solid fuels; and MWh for electricity purchased
Emissions Data Source Secondary, industry average data (BEIS UK, 2019, Eco-Invent 2016, BEIS UK 2016)
Calculation Status Rationale
The upstream emissions arising from the fuels purchased are not material considering the overall Scope 3 emissions. However, this category has been calculated as the consumption of fuels in operations is a key activity and accounts for considerable expenditure for the company. Mapping the upstream emissions from these fuels allows consideration for the broad footprint of these activities beyond Scope 1 and Scope 2 combustion emissions.
Calculation methodology
The volume or mass of each fuel procured by the operations was multiplied by the corresponding well-to-tank emissions factors to yield the total upstream emissions attributed to each fuel/energy type.
For electricity used in each operation, the transmission and distribution (T&D) losses, well-to-tank emissions for generation and T&D were taken from Department of Business, Energy & Industrial Strategy (2016) factors and used for the corresponding activity data.
Allocations and Key Assumptions
It has been assumed that the suppliers of the fuels and energy products produce emissions in line with industry average estimates.
Exclusions
Final journey of transportation and distribution emissions not included from central hub to final destination (estimated to be immaterial at this time at approximately 1% of total Scope 3 Category 3 emissions).
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Category 4 Upstream Transportation and Distribution
Category 4
Category Description Transportation and distribution of products purchased by the company between tier-1 suppliers and its own operations
Total Scope 3 Emissions (MtCO2e)
0.45
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not material, calculated (Fair, 0%)
Activity Data Source Anglo American data management systems for goods and services purchased and Google Maps for haulage distances estimates
Emissions Data Source Secondary, industry average data (BEIS UK, 2019)
Calculation Status Rationale
The upstream transportation and distribution of purchased goods is not considered to have a material impact on the overall Scope 3 emissions; however, the company’s influence over suppliers, delivery frequencies and modes and the company’s exposure in this regard to climate-risks makes these activities a priority for this exercise.
Calculation methodology
Our methodology allows for the computation of emissions based on the journey distance and journey transport modes (per journey or part of journey) between a supplier’s facility and the delivery address. This information was not available at the time of assessment and expert estimation of distances from a local regional hub and attributed transport mode was made.
An industry-average emissions factor for the mode of transport (truck, rail, or ship) was applied to the corresponding distance to yield an emissions factor per unit mass purchased for each good. In turn, this was multiplied by the mass of key operational inputs purchased in 2018 to yield total emissions.
Allocations and Key Assumptions
The GHG Protocol categorises Scope 3 emissions as upstream or downstream based on financial transactions. For transportation and distribution of the company’s products, the availability and granularity of information concerning freight costs and responsibilities was not determined; as such all transportation and distribution emissions from these activities have been allocated to Category 9. In aggregate, Category 4 and Category 9 should provide a materially complete report of these types of emissions for the company.
Exclusions
Goods and services not captured in Category 1 have similarly been excluded from these calculations, estimated to be immaterial at this time.
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Category 5 Waste Generated in Operations
Category 5
Category Description Disposal and treatment of waste generated by the company’s operations in the reporting year
Total Scope 3 Emissions (MtCO2e)
0.02
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Fair, 0%)
Activity Data Source Anglo American data management systems as mass and type of waste produced in 2018
Emissions Data Source Secondary, industry average data (BEIS UK, 2019)
Calculation Status Rationale
Scope 3 emissions from waste generated in operations is not material but has been calculated due to the influence that the company has over these activities and the importance given to the mitigation and treatment of waste by stakeholders.
Calculation methodology
The activity data received from the internal systems in the form of mass per waste type was recorded for each operation. The emissions data comprised of the industry average (secondary) data for waste treatment and for goods freighting (to quantify the waste transportation emissions) using BEIS UK (2019) emissions factors. The primary data on the distance from the operations to the waste treatment site were aggregated to provide an average waste transportation distance per operation. The goods freighting emissions factors were multiplied by the average distance per operation to yield waste transportation emissions that were added to the waste handling and treatment emissions for waste generated and treated off-site.
Allocations and Key Assumptions
It was assumed that all materials and respective quantities were hauled off
site and treated in facilities not owned or controlled by the company. Bulk mining wastes were not included, on the basis that these wastes are not handled off-site.
Distances to the various waste treatment site were aggregated for each operation and multiplied by a goods freighting emission factor, meaning that the emissions are based on aggregated transportation estimates. It was assumed that the waste was transported on a heavy goods vehicle.
Exclusions
None
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Category 6 Business Travel
Category 6
Category Description Transportation of employees for business-related activities during the reporting year (in vehicles not owned by the company)
Total Scope 3 Emissions (MtCO2e)
0.01
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Good, 0%)
Activity Data Source Anglo American’s corporate travel service provider activity data in the form of flight trips and distances, car rental days, and hotel accommodation stays in 2018
Emissions Data Source Anglo American’s corporate travel service provider for hotel stays and daily car rental emissions factors; and secondary, industry average data for flights (BEIS UK, 2019)
Calculation Status Rationale
The emissions under this category are not considered to be material to the overall Scope 3 emissions inventory; these have been calculated in accordance with the principles of completeness and transparency. The company has substantial influence over the extent, modes and class of travel undertaken for business travel and opportunity to create internal awareness, adapt behaviour and reduce emissions in this category.
Calculation methodology
Activity data was provided for flight trips and average flight trip distances, hotel stays, and car rental data for 2018 by Anglo American’s corporate travel service provider, which also provided emissions factors for car rental and hotel accommodation based on spend. The emissions factors for flights were based on industry averages for domestic, short-haul, and long-haul flights and included combustion emissions with radiative forcing as well as well-to-tank emissions for the trip, provided by BEIS UK (2019).
Allocations and Key Assumptions
None
Exclusions
Business travel in employee-owned
vehicles, estimated to be immaterial at this
time.
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Category 7 Employee Commuting
Category 7
Category Description Transportation of employees between their homes and their worksites during the reporting year (in vehicles not owned by the company)
Total Scope 3 Emissions (MtCO2e)
0.03
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Poor, 0%)
Activity Data Source Anglo American data management systems and internal divisions’ existing Scope 3 emissions reports for Iron Ore, Copper and Nickel operations and business units
Emissions Data Source Secondary, industry average data (BEIS UK, 2019)
Calculation Status Rationale
The emissions from employee travel are considered to be immaterial to the group’s overall Scope 3 emissions. The reason for inclusion in the Scope 3 inventory is to raise awareness internally, encourage behavioural changes in employee commuting habits and contribute to completeness in the Scope 3 inventory.
Calculation methodology
For vehicular travel, daily commuting distances were multiplied by industry average emissions factors for each vehicle corresponding to the number of trips undertaken in the period.
Where data was available regarding fuel utilised for employee commuting, this was input with appropriate emissions factors sourced for the related fuel from BEIS UK (2019) in the assessment.
Allocations and Key Assumptions
For bus, minibus and average car travel, the total daily distance travelled estimate is used as an activity data input. The distance is an average distance between the operation and the residential location of an assumed bulk
of employees, or a weighted average of several locations.
Commuting behavioural attributes, trip frequencies and vehicle loading assumptions were applied for different employee groupings, and respective emissions rates were based on estimations of operational schedules, estimates of average daily distances, vehicle types and average efficiencies. These data points were composited to model emissions results for each operation.
Exclusions
Australian operations may have a proportion of air travel that would qualify for this Category due to the use of Fly-In Fly-Out (FIFO) arrangements which does not apply elsewhere. FIFO travel is arranged by a centralised travel agency, the data of which has been reported under Category 6 (Business Travel). To avoid double counting and because this data cannot be ring-fenced at this time, no FIFO based employee travel is recorded under Category 7.
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Category 8 Upstream Leased Assets
Category 8
Category Description Operation of assets leased by the company in the reporting year and not included in Scope 1 and Scope 2 emissions
Total Scope 3 Emissions (MtCO2e)
N/A
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not relevant, not calculated (N/A)
Activity Data Source N/A
Emissions Data Source N/A
This emissions inventory boundary is defined to include all assets for which the group has operational control. The company does not have upstream-leased assets for which it has operational control, and this category is therefore not relevant and not calculated.
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Category 9 Downstream Transportation and Distribution
Category 9
Category Description Transportation and distribution of products sold by the company in the reporting year between the company’s operations and the consumer (in vehicles not owned by the company)
Total Scope 3 Emissions (MtCO2e)
4.31
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Fair, 41%)
Activity Data Source Anglo American data management systems and sales records for product transport data; distance estimates from Google Maps; Rightship, Rindlisbacher (2015)
Emissions Data Source Secondary, industry average data (BEIS UK, 2019); Rightship emissions modelling results and data; and in-house calculations for helicopter freighting emissions
Calculation Status Rationale
Downstream transportation and distribution emissions of Iron Ore are considered as material to overall Scope 3 emissions. This product type accounts for most emissions arising from downstream transportation and distribution activities, due to customer distances being notably greater than for the other commodity types and the significance of the bulk product moved.
The emissions from this category have been calculated as material, as well as considering climate-risk exposure and the company’s influence over supplier practices.
Calculation methodology
Each product is transported from the mine/smelter/refinery to either a customer directly, a departure port, regional logistics hub or to a further processing plant in its first journey. These distances were estimated for each operation based on reasonable assumptions and information provided by operational staff. Similarly, the mode of transport for this first journey for each of the products sold, given
infrastructure in a given geography. Industry average emissions factors for the given transport mode were applied to the freight distance to yield an emission estimate for the first journey emission for each product.
Regarding the second journey emissions for products moved as marine freight (both containerised and bulk), information was sourced from a third-party provider commissioned to undertake detailed activity and emissions modelling; RightShip – a maritime risk management and environmental assessment organisation. Rightship records the shipping charters for the reporting company and the cargo types and volumes to determine the attributable carbon emissions. RightShip calculates emissions according to a certified methodology and includes well-to-propeller emissions Regarding the logistics of diamonds and refined PGMs, helicopter freighting followed by air freight was assumed. Helicopter emissions data was calculated as an average fuel usage per hour (Rindlisbacher, 2015) and the emissions factor for aviation spirit. This emissions factor was applied to the
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expected return flight duration with an assumption of flight speed for helicopters. Applying an assumption of the mass of product that is transported per flight, an emissions factor per flight was calculated. Lastly, an average helicopter distance across the operations was obtained and the emissions factor per flight divided by this average distance to yield an average emissions factor per km of helicopter flight for the applicable operations.
Allocations and Key Assumptions
The GHG Protocol categorises Scope 3 emissions as upstream or downstream informed by financial and risk arrangements. For transportation and distribution of the company’s products to customers, the availability and granularity of information concerning freight costs and responsibilities did not support this differentiation and was not determined; as such all transportation and distribution emissions from these activities have been allocated to Category 9 and none to Category 4. In aggregate, Category 4 and Category 9 should provide a materially complete report of these types of emissions for the company.
It was assumed that product sold to domestic customers undertakes only the first journey.
For commodities that are transported by helicopter, assumptions were applied regarding top speed and average product mass moved.
Distance estimates were made based on Google Map data between operations and their first journey’s delivery point.
Exclusions
Containerised sea freighting of small shipments of Copper; the final journey,
from destination regional hub/port for sold products to final customer location; and inter-operation transfer of mined material for processing before sale. These exclusions were made due to challenges in activity data availability and are estimated to be immaterial at this time.
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Category 10 Processing of Sold Products
Category 10
Category Description Processing of intermediate products sold in the reporting year by downstream companies
Total Scope 3 Emissions (MtCO2e)
83.88
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Material, calculated (Good, 0%)
Activity Data Source Anglo American data management systems for mass of product sold and data regarding processing routes (where applicable)
Emissions Data Source Secondary, industry average data (IPCC 2006, Eco-Invent 2016, Physics Procedia 2014)
Calculation Status Rationale
The emissions attributed to the processing of sold products are considered material and of significant importance. These emissions have been calculated due to the magnitude of GHG emissions arising from the processing of the products sold, particularly Iron Ore, Copper and Metallurgical Coal. Processing emissions for each operation were calculated for completeness and to provide a wholistic account of the downstream emissions profile.
Calculation methodology
For the processing of Iron Ore, first a sinter production emissions factor was applied to the mass of Iron Ore bound for sintering, a pelletising emissions factor applied to the mass of Iron Ore bound for pelletisation, and the mass of Iron Ore sold in ‘Lump’ form was not associated with any iron preparation emissions factor, being applied directly to the blast furnace and blast oxygen furnace. Following the iron preparation stage, the Iron Ore product is converted to crude steel primarily by blast furnace followed by basic oxygen furnace processing, having accounted for estimated efficiency of conversion by Anglo American customers. Our
methodology considers the potential over-accounting of emissions for the Iron Ore business value chain converging with that of our Metallurgical Coal business, and a processing phase apportionment is applied to emissions arising from crude steel manufacturing.
For Metallurgical Coal, the emissions factor from processing the coal into coking coal in a coking oven was used. The mass of coal sold by the company was multiplied by the corresponding coking emissions. The calculated emissions arising from the convergent value chains and apportioned to the Metallurgical Coal product has been accounted for in Category 11 (whereas the portion to Iron Ore product is accounted for in this Category as described above).
For Thermal Coal, processing phase emissions arise from the pulverisation of the lump coal prior to combustion. These emissions were sourced per unit mass and multiplied by the tonnes of coal sold by the company in the reporting year.
For Copper processing phase, the emissions for each segment of the Copper value chain was determined, from Copper Concentrate mining and refining, Copper Anode production,
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Copper Cathode production, and Copper sheet rolling. Depending on the product produced at an operation, the processing emissions down the value chain to copper sheet rolling were applied. The emissions up the value chain were subtracted to avoid double counting of emissions. As a subset of Copper, Molybdenum is processed by open hearth roasting and applied to the manufacturing of stainless steel; suited Emissions arising from diamond cutting activities as a major processing step were accounted for based on the estimated energy intensity of equipment used for this purpose, average carbon intensity of the energy sources applied and sold quantities.
industry average emissions factors for these activities were applied.
Allocations and Key Assumptions
Iron Ore and Metallurgical Coal: all Iron Ore produced is assumed to be used for steel production. Consideration has been given to the methodologies employed by others in the industry and current industry practice for Scope 3 Metallurgical Coal and Iron Ore , as well as emissions that might be expected for the applicable coal quality and application (for which upward revisions were made).
As there is no agreed standard for calculating processing and use phase emissions for companies that produce both Metallurgical Coal and Iron Ore in such proportions that it results in approximate double-accounting if each is accounted for individually, a series of methodologies were reviewed for calculating Anglo American’s processing and use phase emissions for these products. Recognising that at industry scale there will be over-accounting in aggregate from all companies feeding into the same value chains, consideration was given to
avoiding significant over-accounting within Anglo American itself and balancing the objectives of accounting for emissions fairly and transparently.
It has been assumed that all Nickel produced is used for stainless-steel production, applying industry averages for material compositions relevant for the quality and nature of product from Anglo American.
Exclusions
None
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Category 11 Use of Sold Products
Category 11
Category Description End use of goods and services sold by the company in the reporting year
Total Scope 3 Emissions (MtCO2e)
128.47
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Material, calculated (Good, 0%)
Activity Data Source Anglo American data management systems for mass of product sold
Emissions Data Source Primary emissions data for automotive use emissions from Ford and Toyota Annual Reports (2018); and Secondary, industry average data (Ampofo-Anti, Dumani & Van Wyk 2015, (IPCC 2006, International Stainless-Steel Forum 2015, CDP 2019, BEIS UK, 2019, World Steel 2018, World Steel 2019, Thyssen Krupp 2019)
Calculation Status Rationale
The direct use phase of the sold products is considered to be material for the following commodity types: Iron Ore, Metallurgical Coal, and Thermal Coal. For completeness, direct use phase emissions for PGMs have been computed, although these are not considered material.
Calculation methodology
In the use phase of crude steel, being the majority application for Anglo American’s Iron Ore and Metallurgical Coal products, global average use phase allocations have been applied. The emissions arising from the processing of crude steel have been apportioned to the Iron Ore product. Secondary steel processing (rolling, casting etc.) emissions factor (WSP Parsons Brinckerhoff, 2015) was applied to the tonnage of iron ore sold by the company. The emissions factor from vehicle manufacturers data per vehicle produced was multiplied by the average mass of steel per vehicle (World Steel, 2019), and then multiplied by the activity data attributed to automotive and mechanical equipment
use. For construction use emissions, industry estimate for the portion of produced steel used for construction was multiplied by the emissions factor for steel-based building products. For the remaining mass of steel produced from Iron Ore , the emissions factor based on industry averages for stainless-steel production was applied according to the average iron content in stainless-steel (Thyssen Krupp, 2019). Category 11 emissions factors were derived from Ampofo-Anti, Dumani, & Van Wyk (2015), International Stainless Steel Forum (2015), and internal calculations based on vehicle manfuacturers Scope 1 and Scope 2 emissions per vehicle produced.
As with the emissions accounting described for Iron Ore sold product in Category 10, the Metallurgical Coal sold by Anglo American was converted into an equivalent mass of crude steel. The calculated emissions arising from the convergent value chains and apportioned to the Metallurgical Coal product has been accounted for in this Category (whereas the portion to Iron Ore product is accounted for in Category 10). Due to the mass of ‘Metallurgical Coal crude steel
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equivalents’ being greater than that of the estimated ‘Iron Ore crude steel equivalents’ in 2018, the difference was applied to the NGER Metallurgical Coal combustion emissions factor less the coking emissions factor already applied to Metallurgical Coal in Category 10.
For Thermal Coal, BEIS UK (2019) coal combustion for electricity generation emissions factor was applied to the tonnage of thermal coal sold to yield the use phase emissions for Thermal Coal. The application of Thermal Coal to other uses is considered marginal.
Refined PGM production was multiplied by an emissions factor proxy developed, based on reported Scope 1 and Scope 2 emissions of a catalyst producer reported in 2014 (CDP, 2019) to derive emissions from catalyst production. Other use phase applications of PGMs are noted but emissions arising from these activities considered marginal.
Allocations and Key Assumptions
As described for Iron Ore and Metallurgical Coal in Category 10, Anglo American applied a methodology for accounting for processing and use phase emissions from these products’ convergent value chains, seeking to avoid significant over-accounting within Anglo American itself and account for emissions fairly and transparently.
The portions allocated between the major use phase applications for steel accounted for (construction, industrial equipment, automotive manufacture, and the remainder in metals, appliances and electronics) were based on global industry averages reported by World Steel (2018) It has been assumed that the emissions arising from the manufacture of appliances, metals and electronics are approximated by the emissions for
stainless-steel production . Furthermore, it is assumed that the use of metal for mechanical equipment can be approximated by the emissions associated with automotive production, and the emissions factor derived from vehicle manufacturers per vehicle produced has been applied to the mass of Iron Ore used in automotive production and mechanical equipment.
All PGMs were assumed to be used for
auto catalyst production. Jewellery
manufacture is assumed to have lower
emissions intensity than auto catalyst
production and our methodology therefore
provides a conservative estimate for
emissions from this product.
Exclusions
Emissions arising from the direct use phase of Nickel (as a minor constituent of stainless steel) are anticipated to not be material and have not been calculated.
Emissions arising from direct use of
Diamonds in industrial applications are
anticipated to not be material and have not
been calculated.
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Category 12 End-of-Life Treatment of Sold Products
Category 12
Category Description Waste disposal and treatment of products sold by the company in the reporting year
Total Scope 3 Emissions (MtCO2e)
0.93
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Good, 0%)
Activity Data Source Anglo American data management systems for mass of product sold
Emissions Data Source Secondary, industry average data (BEIS UK, 2019, UNEP 2011, Johnson Matthey 2018, Henckens, Driessen & Worrell 2018)
Calculation Status Rationale
The emissions arising from the end-of-life treatment of the company’s sold products is deemed to have immaterial contribution to the overall Scope 3 emissions. However, these are calculated for completeness and relevance, as intervention in this final stage of the product lifecycle may determine ultimate emissions. Emissions from the recycling and disposal of sold products are a priority as the industry seeks to transition towards sustainability and a more circular economy. Emission reduction from the use of recycled materials is of critical interest for stakeholders and industry players globally.
Calculation methodology
For Thermal Coal and Metallurgical Coal, an approximation was made for the mass of ash residue after combustion (Mahlaba, Kearsley, & Kruger, 2011). This result was applied to BEIS UK (2019) landfill placement emissions factor.
For Iron Ore, Nickel, Copper and PGMs, global average product recycling rate estimates were sourced from UNEP (2011), Henckens, Driessen, & Worrell (2018) and
Johnson Matthey (2018). The BEIS UK (2019) scrap metal closed-loop emissions factors were applied to the percentage of each metal recycled. The remaining percentage of each metal was multiplied by the BEIS UK (2019) scrap metal landfill emissions factor as this portion was assumed not to be recycled. This methodology attributes the emissions associated with the transportation and separation of the metal waste for the unrecycled mass, and the closed-loop (recycling) emissions for the recycled mass.
Allocations and Key Assumptions
The end-of-life treatment of Diamond products was assumed to be zero, as Diamonds are incredibly hard wearing and are not recycled but are reused without considerable processing.
Recycling rates for relevant Anglo American products were assumed aligned to those reported by UNEP (2011).
It has been assumed that all the PGMs are
used in auto catalyst manufacture.
Exclusions
Recycling or other end of life activities
surrounding Diamonds as activities are
22
considered highly uncertain and likely
negligible.
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Category 13 Downstream Leased Assets
Category 13
Category Description Operation of assets owned by the company and leased to other entities in the reporting year
Total Scope 3 Emissions (MtCO2e)
N/A
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not relevant, not calculated (N/A)
Activity Data Source N/A
Emissions Data Source N/A
Exclusions N/A
This emissions inventory boundary is defined to include all assets for which the group has operational control. The company does not have upstream-leased assets for which it has operational control, and this category is therefore not relevant and not calculated.
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Category 14 Franchises
Category 14
Category Description Operation of franchises in the reporting year not included in Scope 1 and Scope 2
Total Scope 3 Emissions (MtCO2e)
0.01
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Good, 100%)
Activity Data Source Third-party Scope 3 emissions reports for De Beers and Forevermark outlets globally
Emissions Data Source Third-party Scope 3 emissions reports for De Beers and Forevermark outlets globally
Calculation Status Rationale
In all respects aside from Diamonds (discussed below), the company does not operate on a franchise model and as such has no franchisees to which emissions can be attributed. As such, this category is not relevant and has not been calculated.
In terms of Diamonds, De Beers Jewellers was launched in 2017. Customer facing stores are operated on a franchise model, with stores in China, Russia, Japan, USA and Saudi Arabia. The emissions arising from the associated activities are not material and are reported for completeness and transparency.
Calculation methodology
The Scope 3 emissions for these franchises has been calculated by a third-party provider prior to this undertaking. The total Scope 3 emissions for the DeBeers and Forevermark franchises has been recorded and presented ‘as is’ from the third-party reports. Future calculations for this Category may be enhanced to increase transparency of reporting.
Allocations and Key Assumptions
None
Exclusions
None
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Category 15 Investments
Category 15
Category Description Operation of investments in the reporting year not included in Scope 1 and Scope 2
Total Scope 3 Emissions (MtCO2e)
2.92
Calculation Status (data quality indicator, and portion calculated from third parties’ data)
Not-material, calculated (Good, 67%)
Activity Data Source Equity investment stakes in joint-ventures and subsidiaries obtained from the Anglo American Integrated Annual Report (2018), supplemented with production, activity, revenue, expenditure and emissions published data by joint ventures and subsidiaries for the period; South African diesel and electricity price averages respectively from SAPIA (2019) and Eskom (2018) published data
Emissions Data Source Primary emissions data on the Scope 1 and Scope 2 emissions for each investment operation according to available Annual Reports. For operations with limited publicly disclosed emissions performance data, emissions intensity assumptions were based on available proxy emissions data for comparable or competitor operations, derived from publicly available disclosure; coal washing energy intensity from US Department of Energy, 2014; Eskom published grid emission factor. Further factors and data derived from UNECLAC, 2016 and Johnson Matthey, 2018.
Calculation Status Rationale
The emissions attributed to the company’s economic interests in other entities not under operational control have been calculated and is not material. These non-managed operations are core to the company’s business model and the rationale for calculation is the materiality of the revenue generated from these enterprises and, although not holding operational control, the potential influence that the company may exert on the performance of these entities.
Calculation methodology
Where primary Scope 1 and Scope 2 emissions data for operations was available, the 2018 reported emissions for these operations was multiplied by the percentage equity held by the
company to yield emissions attributable to Investments.
Where no reported Scope 1 and Scope 2 emissions were found in research, an emissions proxy was applied, computed as available emissions data from a company producing the same material as the operation in question to yield a useable factor for emissions per unit produced. This emissions factor was multiplied by the mass of material produced by the company’s operation in question.
Allocations and Key Assumptions
The methodology has assumed fuel cells contributed approximately half of sales revenue of alternative Powertrains sales.
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For South African Rand to Canadian Dollar exchange, an average C$-Rand of 10.2 was applied.
It was assumed that diesel accounted for a majority of port energy consumption and electricity for about a third of port energy consumption.
Exclusions
Respective Scope 3 of non-managed investments and joint-ventures; though the respective Scope 3 emissions for these non-managed joint ventures and subsidiaries may be relevant, the certainty with which such emissions might be estimated is very low and has not been included at this time.
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